June 16, 2014

Bank on booming Britain

While you may have been watching the opening game of the World Cup on Thursday night, the Bank of England Governor, Mark Carney sent sterling surging towards a five-year high with his speech at the Mansion House in London.

This move in Britain could have a significantly positive effect on the prospects of the Irish economy.

In the real world of commerce, we have always depended more on Birmingham than Berlin.

As this column has written over the years, Ireland is tethered to the most incomprehensible exchange rate policy because we are use the euro – which is in effect Germany’s currency – yet we do far more trade with Britain.

More importantly, the stuff we sell to Britain, unlike the stuff the multinationals that are based here sell (or pretend to sell, according to the EU Commission), we actually own. These are Irish real goods, made by Irish people, owned by Irish people.

So when Britain is booming, it is good for the Irish economy in a much more amplified way than when other trading partners are booming.

In addition, because Irish people emigrate to Clapham rather than Cologne, when Britain is doing well, there are job opportunities for Irish individuals in Britain which Irish people fill. In contrast, job opportunities in Cologne, are rarely filled by Irish emigrants.

So at an individual level, if Ireland is not doing well, it is better for us that Britain is prospering than if Germany is prospering.

In fact, we can go one further and argue that Ireland’s economic stance in counterintuitive.

For example, the best situation for us is one where Germany and the euro are in trouble, like now with deflation, and Britain is booming.

This oddity is because when the eurozone is in trouble, our interest rates are low, easing the debt burden on hundreds of thousands of Irish households. If sterling is also likely to be strong during these periods, Irish exports to Britain more competitive. So it’s a double positive.

We are experiencing this virtuous combination at the moment.

This week, I am going to use three charts that explain what is going on and how it affects Irish exporters and Ireland.

On Thursday evening, a surprisingly hawkish Governor of the Bank of England, said that Britain would probably have to increase interest rates sooner than later because of the booming housing market. Immediately, sterling surged to $1.6987 against the US dollar and more importantly for us, it reached an 18-month high against the euro. The euro fell to 79.9p.

Look at figure 1. It shows what is happening.

Figure 1: Euro/GBP FX

The euro has been gradually falling against sterling since early 2009 when it spiked up to nearly parity – at a time in Ireland when our domestic economy collapsed.

Now as you can see, sterling is strengthening and in the chart you can see the euro falling. This is good news for our exporters.

But will it last?

By saying that a hike in interest rates “could happen sooner than the market expects” Mark Carney changed the game and people now think British interest rates will rise faster than previously thought. This should keep sterling strong.

His words also have another psychological effect.

They signal that the world of permanently low interest rates of 0.5 per cent cannot last forever. The Bank of England now becomes the first major central bank to announce rate hikes since the financial crisis of 2007-2008. Many expect others to follow suit, such as the US Federal Reserve.

However, the ECB, which is still trying to defeat deflation, will lag behind. This difference in rates, between the Europe and Britain, is expected to increase and further strengthen sterling.

We can see this change in interest rates expectations in figure 2.

Figure 2: UK vs EUR interest rate expectations

What does all this mean for Ireland?

As Britain is our second largest trading partners, comprising roughly 16 per cent of our export market (and these are real things, not Apple’s makey-uppey exports), all this is highly advantageous to Irish exporters.

A while back, the chief executive of the Irish Exporters Association (IEA), John Whelan, admitted “the exchange rate with sterling has been a barrier to Irish export growth in recent years”.

He went on to say that “an ideal exchange rate is about 70p”.

This sentiment was reinforced by chief executive of Bord Bia, John Cotter, who claimed in 2010 that “one of the single biggest factors in the decline has been the depreciation of the sterling against the euro”.

If you doubt this, look at the final chart. It plots the movement of the sterling/euro exchange rate and Irish exports to Britain. You can see that Irish exports, as the head of the exporters claim, are highly sensitive to the exchange rate. A few cent movement in the wrong direction can wipe out the competitive position of many small Irish exporting companies.

Figure 3: EUR/GBP vs Irish Exports to the UK

Quite how any regime could have given away the power over its exchange rate to Europe without much analysis remains one of the most extraordinary moves on the part of Irish establishment.

The exchange rate is crucial. Indeed Paul Volker, the former head of the Federal Reserve described the exchange rate as “the most important price in the economy”, I agree with him.

We know that sterling’s value is of huge importance to us. We are the only euro country with a land-border to the sterling area and we also have what I call the “Sainsbury’s Index” of exchange rates.

The Sainsbury’s index is the most telling indicator of over or undervaluation any exchange rate has. I am talking about Sainsburys in Newry

When the euro is too strong against sterling, the best indicator of this overvaluation isn’t some fancy chart, but is the eight-mile tailback at the roundabout in Newry of people from the Republic stocking up with cheap British booze for the Christmas.

In contrast, when sterling is strong, you’ll see no slabs of cut-price Tennents stacked in the boots of Toyota Corollas in the Sainsbury’s car park.

For the foreseeable future sterling and the British economy will be strong and European interest rates will remain low. This combination is good news for Irish exporters and this should be welcomed.

Which deflation are you talking about? Some time ago you informed us the housing market in Germany is overheating. This article references the housing market in the UK overheating? The Dublin Housing market is going balubas. Rents sky rocketing. Ditto for London rents. No one I know got a letter in the post saying prices were dropping. The stock markets are making new highs. And all of this where banks are putting money on deposit with to get safe returns on investments and where in Ireland bank lending is falling off a cliff. So cash purchases are driving house prices in Dublin balubas which in my book is runaway inflation especially since borrowing is dropping.

So it begs the question; is it only when people are producing wheelbarrows full of cash to buy a house that you will accept the possibility of hyperinflation? One other thing David the idea that people postpone purchases when prices drop to get better value with lower prices doesn’t always apply. Did the thought ever cross your mind that people have LESS money to spend because of all the extra taxes and rising costs of living in Eiruba and STILL prices are rising?

Thanks eugene. But my question wasn’t answered. What I am trying to get at is just because an economy is contracting doesent mean we have deflation.

The european establishment needs 2% to 3% growth to keep the money supply stable since money is borrowed into existence and prevent the derevitaves bubble from deflating. Remember some of the european banks are levered 50 tio 1.

The sterling collapse against the euro went totally unremarked at the time. I totally noticed as an Irishman working in England on what was a salary increase when I moved that within two years I was earning less, in Euro, by far than I had left for. Yet, nobody in the UK or Ireland really commented on it. It was 1.6 euro to the pound. Now its 1.26 and it was near parity at one stage.

“In the real world of commerce, we have always depended more on Birmingham than Berlin.”

You’ll get the West Brit brick-bats for this one, David. LOL! There’s a real pain barrier for the Irish Establishment to go through before they are prepared to re-visit the fateful and absurd decisions that led to the Euro and becoming a satrapy without control of interest rates.

Birmingham has one of the youngest demographic profile cities in Europe and with the ‘Trojan Horse’ Muslim school stuff and Tony Blair raving about invading Iraq again over Isis: a flash-point scenario for the world’s future. It either becomes rich again or it goes up in flames. Your choice, Prime Minister Cameron. You’ve watched “Peaky Blinders. Series 1″ and know you’ll get the same treatment from dissident Brummies as Winston Churchill got. Allegedly, apocryphally, we were burning the King’s portrait in anger of joblessness after WW1.

But it’s not just Birmingham that Ireland’s economic actors need to watch it’s also Nottingham, the other twin capital of Mercia, which the Normans try to maintain the fiction of East and West Midlands to stop the region rising. Once the Jocks leave in September, expect fireworks in the English regions, whether or not Engerland win the World Cup. Canuck Plastic Paddy Wannabe Brit Mark Carney absolutely gets all this:

“Mark Carney’s choice of Nottingham for his first speech as governor of the Bank of England on August 28th at the University’s conference centre was, in his own words, ‘not by accident’. The East Midlands, it emerged, is a bellwether region for the Bank based on the broad base of its regional economy, ‘with leaders in retail, manufacturing, engineering, logistics, information services, biosciences and education, Nottingham and the East Midlands are integral to the success of the UK economy’.”

Sensible English people have abandoned the international Babylon of London, other than to go to Arsenal matches. My advice to anyone leaving Ireland as “voluntary economic lifestyle ‘fugees” now or in the next crisis is to think stragegically. Especially if young and wanting the Zorba Full Catastrophe of Wife, Career, House and Jobs. In London and the South East that’s almost impossible now for folk of modest means without becoming a Bankster’s bitch, paeon debt-slave. However, in Nottingham, the Good Life is very visible and with a bit of graft you could be mortgage free in a few years with an actual family sized house, not a dog-box. When I was there a couple of weeks ago to watch Nine Inch Nails, the sun shone and the glistening trams and cycle festival made it seem like the most exotic city in the world. Actually, it really is exotic, once you dodge the dodgy crime-pimp-drugs stuff, which I have to investigate for research purposes but nobody else should go there, etc. And it’s very well connected to London, even if getting to Brum and back is like going on a safari because: all roads/trains lead to/from London. Just like Dublin.

If HS2 happens and there’s an upgrade of the M42 all the way from Brum to Nottingham then the desperate hordes from London / SE will be after the prize real estate of Warwickshre and South Birmingham and it will become a version of Tokyo-Osaka, for good or ill.

‘bonbon’, or whatever he/she calls themselves on David McWilliam’s forum these days, goes on about Shannon land bridges to Siberia and all that nonsense when the real big project is staring everyone in the face: a bridge/tunnel linking the two Isles Of Wonder, the island of Britain and Ireland. Presumably via Ulster-Galloway, but some still think it’s possible to link Dublin to Anglesey. With a HS2 and Trans-Penine network, you just switch the Isles of Wonder from Portrait to Landscape, neuter nefarious Norman London hegemony and, hey presto!: An entirely new economic landscape opens up with The Vision Thing.

That’s the goal of Mercianomics, by the way. To neutralize 800 years of Toraigh hegemony and re-build the cultural and economic alliances of the mosaic of Spiral Tribes across these Isles of Wonder, Plunder, Isles War-Torn Asunder.

ps: Are you all in your Eng-Eire-land hats in Temple Bar, cheering Shire Irish hero Wayne Clooney on to top Messi? LOLOLOL! If not, just take those Man U tops off and stop being Plastic Brits….. *popcorn*

pps: Link Dubs to North Wales/Crewe/HS2/Brum/London’s fine, but it won’t help solve Taffy’s problems of the Cambrian Desert of sheep and the overal Welsh non-country ‘Principality-Prince Charle’s Prison Bitch’ status-anxiety issue. But then, they can sort themselves out of their victim script too. I think I’ll watch the England-Uruguay match in Cariff….for the lulz, singing Rik Mayall’s “Noble England”. *smirks*

It is amazing to me that apparently educated Irish readers on this site gobble up this pro-British dribble every day. Today McWilliams writes a whole piece praising the beneficial effects on Irish exports of a strong Sterling without a single word about its devastating effects on Irish imports and Ireland’s cost of living.

Ireland is forced to buy all its capital equipment from Britain because when joining Europe it stuck to outdated British standards. The mistake was not in joining the Euro but doing so without joining the rest of the world and leaving behind the old British Empire and its outdated British standards. It didn’t because the Irish are still British at heart.

Why don’t you all just follow McWilliams back into the UK and have done with it? It is either that or adopt modern international standards on all the equipment you currently slavishly buy from Good Old Britain.

Pat, you may not have noticed, we drive in KMs now and not in Imperial miles !!!! Irish rail, in recent years, spent € 500 million buying train carriages from Japanese firm Mitsui !
So where are you getting your outdated information from ? The Colonial Office ?

“Ireland is forced to buy all its capital equipment from Britain because when joining Europe it stuck to outdated British standards. ”
You made a factual statement to underpin your argument which as I have demonstrated is absolutely incorrect…therefore your whole hypothesis fails ! So before climbing on your high horse to criticise others, go away and find out what your are talking about !

Pat re your slave comment – are you deliberately missing the point that I highlighted your factual error ? If you read my comments re Black Wednesday and preferring tio remain in Euro Europe, then you would have seen I am not a slave to Britain ! Be gracious enough to admit you made a mistake !

Yes, I made a mistake in saying “all” capital equipment instead of “most” capital equipment. But you jumping upon that mistake to invalidate my whole point is disingenuous and suggests a strong desire to play down the fact that we are forced to buy far too much stuff from Britain. Whether you love being a slave to Britain or not I will withdraw as hyperbole but I doubt you will lead the charge for import substitution. Now are you happy?

Again, I ponder: Who is forcing anybody in Ireland to buy ‘stuff’ from Britain? Enda? Joan Burton? Mysterious sprites rising from the Liffey in the middle of the night?

Do you not think it’s a bit insulting to call modern Irish consumers and business procurement managers ‘slaves’? You don’t seem a very happy bunny, Pat. Watch the World Cup. The USA are in the lead! Yay, I bet those Ancient Order of Hibernian guys in Boston and NYC are whooping along having switched back to being American for the night. They can do that but if us Shire Irish Wayne Rooney types do it and lie back and think of Eng-Eire-land, it’s really, really bad. LOL! u wot mt8? innit. Etc

“Ireland is forced to buy all its capital equipment from Britain because when joining Europe it stuck to outdated British standards. The mistake was not in joining the Euro but doing so without joining the rest of the world and leaving behind the old British Empire and its outdated British standards. It didn’t because the Irish are still British at heart.”

Have I understood this correctly? Ireland chose to join the Euro, nobody forced it to. It also chose to remain tethered to the UK in key areas of technical compatibility. Again, nobody forced this onto anyone in the D4 Establishment. It was probably pure laziness and lack of vision. Ireland left the British Empire to join the European Empire whilst still remaining in lockstep with the Holy Roman Empire. Again, nobody’s choice or fault other than the regimes running Ireland through the period when these choices were made.

Who exactly are you blaming or complaining about or to? Irish citizens and their previous political and cultural choices? Or some imaginary British overlord you want to use as a fail-safe excuse to blame the current economic epicFAIL and centuries long cultural victim script on?

“Everybody here in Ireland seems to accept that they are de facto part of the UK. The world’s suppliers consider it one market.”

Go tell Enda and the rest of the crew. They spend enough time and money doing the St Pat’s export drive-shamrock stuff, you’d think they’d at least have conveyed to the rest of the world’s suppliers that Ireland is a country independent from the UK. If not from Europa.

You also remonstrate: “Make up your minds. Are you British or European?”

Might I suggest a third option? How about being Irish in a way that’s fit for purpose in the C21st? And how about taking responsibility for choices made in the past which have created today’s realities and are shaping tomorrow’s future political and cultural landscape. Or, y’know, just Blame The Brits and snuggle up to Germany. What could possibly go wrong? *rollseyes*

Oh, what ‘international standards’ are you on about? Has the United States embraced the Metric system? Or are you just talking nonsense?

Oh, wait! Jack Charlton! Most of them were plastic paddy Brits who couldn’t even sing “Amhrán na bhFiann”. Saipan! Ban ‘soccer’! Back to hurling and authentic Irish sports….Are RTE even showing the World Cup? If so, why?

I remember being on holiday in Corfu, with my expensively purchased Starling cheques the weeek of the notorious ‘Black Wednesday’…yes to go on holidays from Ireland, you had to buy sterling ! I remember having to buy sterling to import goods to Ireland for re-sale with a different sterling rate for each purchase. Maybe Mr williams doesnt remember the joys of being linked with sterling ?
No thank you…I would rather continue being able to hop on a plane with my own euros and fly to wherever i like in Europe, i.e Euro Europe.

Anglophobia and Anglophilia are the twin curses of Irish political discourse. In an argument over whether we should be tied to sterling or tied to the euro, a proposition that is never put forward is whether we should, for the first time ever, actually have our own currency!
Tying our currency to sterling from 1922-1979 was the monetary equivalent of James Connolly’s dictum about painting the red postboxes green…….

IN his book, “Sins of the Fathers”, Conor McCabe has some brilliant inisghts into the monetarist headbangers who ran the country from the Dept of Finance, the Irish branch of the Roman Catholic Church and the comfortable element of the Irish farming class who benefited from our hard currency policy under both sterling and later the euro. The gombeen Irish political class never dared confront any of them. How about we serve neither King nor Kaiser?

The currency issue is only a small part of Ireland’s economic issues. Ireland could switch to its own currency and “serve neither King nor Kaiser” as you put it, but it would still have to buy all its capital and much of its consumer products from Britain, not because of currency issues but because of standards compatibility issues.

Everybody here in Ireland seems to accept that they are de facto part of the UK. The world’s suppliers consider it one market. They rarely appoint separate distributers for Ireland. Ireland has virtually no ecommerce of its own. It is a mere subdomain of the UK. Amazon.co.uk is a good example. Perhaps Ireland should change its name to Ireland.UK.

And BTW this is neither Anglophobic nor Anglophile, it is pure economics.

Amazon is of course based in Ireland. The co.uk is just where the domain is registered.

It makes sense for most distribution centres to treat Ireland and the UK together, but in fact most international companies bundle them both, and all od Europe and all of the Middle East into one area.

I am totally dubious about your claim that capital equipment from Germany won’t, in general, in Ireland.

Amazon is based in the IFSC. That entity has as much to do with the Nation State concept of “Ireland” as The City of London has to do with authentic “England”, Engerland, Eng-Eire-land. You are correct, ‘most international companies’ have very little interest in the quaint nostrums of the Nation State Project, including the nationalist memes and dreams that emerged from, say, 1916-1922 on the island of Ireland, as an example.

I think they probably use Orwell’s permanent war strategic blocs of Oceania, Europa type terminology when blue-sky thinking their next strategic moves. I don’t think most residual Nation-State actors do ‘strategic thinking’ anymore, hence the *interesting* situation that is Europa/EU/Euro and “Ireland Inc”‘s currency/interest rate predicament which this article addresses with some panache.

Mind you, there’s some pesky UKIP/SNP types on this island of Britain who are clinging to the notion of National Sovereignty and I hear rumours there are still some on the island of Ireland who aren’t interested in fluffing Brussels and Berlin, but I’m sure those rumours are just the usual scurrilous nonsense amd the recent upsurge in Sinn Fein’s support is entirely unconnected. At least that’s what the Indo and The Paper Of Record re-assure me every time I waste 5 irreplaceable minutes of my life scanning their meretricious meta-analyses.

You *might* notice I’ve flipped the switch now and turned the “quite mad” stuff off for a few minutes….. I have a busy day, duckin’n'divin, doing final due diligence research stuff on the new CF Woodford Equity Income Fund before commitment or pass. Not that I know anything about that kind of thing! Same as I know diddly squat about the meta narratives of Nation State actors such as the Republic of Ireland or the DisUnited Kingdom.

Jayzus, do I need to cop on to myself! Here I am typing gibberish onto a screen as the sun rises over the Shire-Irish heaven of Mercia. I’m so delusional as to think I’m #LivingTheDream when, in fact, you has sussed the truth. You alone can tell I’m no more than just another plastic paddy who imagines a genuwine 2016 Diaspora Uprising with the intention of reading the riot act to the Failed State project of the First Irish Republic outside the online ‘second life’ Fifth Province GPO on O’Connell Street. What a totally psychotic notion! I’ll print off this thread and take it to my psychiatrist later today so she can either adjust my medication or arrange for a temporary emergency placement.

Now, I’ll just ‘subscribe’ by email to any further *fascinating* comments and let ye all get back to gold, bitcoin and land-bridges. I have a deep interest in all 3 subjects, but I’m not aware that our host has actually invited discussion on them, just as he hasn’t invited a #GlobalDataInsurrectionistWorldLeaderPretend like me to rant and rave on his pristine web-log. Maybe you should all organise another “down with Free Speech!” type protest to get me banned. That would stop me in my tracks…ahem!

Why is it so sunny this week .Is it because there are no clouds above us ? It is because the wind did not blow the clouds towards us .It is sunny because there is no wind not because there are no clouds.

Why is there a booming Britain ? Sterling and Euros are found in print and in the pc and in a local circulation territories close by .Yet they each have a different value and a varying one .The varying value is what is relevant .The Swing and significant variation is what causes the Boom not a rate set in stone because there is none .

The cause of the Swing will determine what happens next not the boom we see now.

So what causes the Swing ? That lies in the Euro and the ECB .

Has Draghi run out of Wind and will he drop all his pants in the receding tide and who’s pants will he wear when he finds a dressing room ?

This article reminds me of a post I made here over 5 years ago where I thought we could take advantage of our position between the Anglo/Americans and Europe. I was more optimistic then as I believed that the people running Ireland were searching for solutions that would serve the common good, a bit like your good self David……..Ah well I might as well dream here as in bed…..

jim says

Irish economic policy pushed through by the PD/FF administration of the last couple of years has been one of low tax, low wage to productivity, competitive in the sense that a larger proportion of profit per unit cost could be repatriated i.e. the Anglo/American model.

We found ourselves at the mercy of the Dollar’s/Sterling’s fluctuations and their attending (Anglo/American) economic business cycles more than the rest of Europe. Unlike Britain we were tied in to the euro as a currency and ECB interest rates over which we have no control. This was most evident when we needed to raise interest rates to dampen demand at the very time ECB were cutting and visa versa at other times.

We had ceded control to Europe and found ourselves falling between two stools so to speak. We were caught in what I would call a ripple effect, i.e. a need for high rates when Europe was low and low rates when Europe was high. We were out of sync on both sides of the equation. While this has some effect on the owners of capital, they can hedge (if their prudent) it has a huge effect on wage earners as they are less equipped to deal with these fluctuations.

What we needed to do was use the available credit to smooth out the ripples and improve the lot of the wage earners as a whole and not allow it to be hijacked by the owners for their own self interest. We failed and ran up a huge debt on day to day spending and compounded the error by going back to bail out some of the owners with the savings we had put by.

That being said its my contention that the weight of the present recession should allow a smoothing of the imbalance between Europe and Anglo/American economic cycles and if we play our cards right this time we as a nation should be able to act as a bridge or conduit between the two conflicting ideologies and reap the benefit which I hope will not be hijacked this time. David is familiar with Dubrovnik’s unique historic position between the Turks and Rome and we could use a similar model. We are uniquely positioned to do it given our historic ties to the Anglo/Americans.

It’s exactly this type of geo-strategic analysis that DID NOT happen in 99 when the Euro was tied around Ireland’s neck. Anyone with a brain could see it was a stitch-up. The USuk hybrid entitty used Ireland Inc & IFSC as a Trojan Horse to hedge themselves against any possible future outcomes/scenarios for the Euro. If it worked, then Canary Dwarf on the Liffey was set up and running as a financial colony to be expanded as required. If it went tits up then Ireland went down the plug-hole and business as usual in Canary Wharf. Win-Win and sold to the credulous Civil Service apparatchiks in Dublin as a rebellion and retreat from British hegemeony. How’s that looking now, lads? Not that they care once they’re on the K-Club on Algarve golf course circuit.

So obsessive was the “Banish The Brits” mentality that hardly nobody saw that the gaping maw of a City/Wall St USuk incubus/succubus was waiting to devour a Sovereign Nation, with the Sovereign Sacrifice to Brussels and Berlin accepted with thanks by the New European allies in Frankfurt banking bunkers.

Now? It’s too late, barring real fireworks. Once UK New Labour’s Gordon Brown announced his utterly unobtainable 5 Criteria for this island to enter the Euro, it should have been obvious it was a stitch up and the massive transfer of temporary credit was just a way of tightening the lock-grip when the first crisis of the experimental currency hit. People talk such nonsense about Brown and Gold sales. They forget the IMF gold and SDR’s which the City of London controls in any serious event ‘going forward’. Plus he sold the 3G telecoms stuff for ridiculous sums. He stopped the nutjob Blair from joining the Euro, if he ever had any intention of doing so, which increasingly seems unlikely.

Having been in a No Lube situation for centuries with the City of London and Norman Royals and Aristocrats, the custodians of Ireland saw fit to get into bed with the Germans! Anyone who’s studied German online erotica knows that it always, always ends up with a back door No Lube finale. I guess that some part of the Irish psyche likes to submit to such tropes, but I think it’s very hidden in the recess of the Irish Hive Mind, behind the GAA glory boy macho crap and fake rebel song knees ups in Man U/Celtic kit lulz.

In 2016, the last 100 years will either be seen as a catalogue of mishaps and gross neglect or the delusions will be enshrined forever. Or until the island is formally annnexed as a satrapy-financial concubine of the Greater Europa Project. Citizens voted for Lisbon Treaty type manacles so that’s that, I guess. And the FF/FG give the option of regime change without policy change carries on. Nobody seems to care, other than the naughty SF voters, but the Irish Times doesn’t take them seriously so they can’t be of any significance. Can they? *thinking*

In summary, it’s banjaxed. And has been since my parents left Laois/Kilkenny in the 50s. Just different forms of Economic Cleansing during different concocted ‘Emergencies’ to suit the D4 Normans who now are setting up their hereditary inheritance family bloodlines through Property as systematically as any Norman Toraigh Whore Aristocrat in ye Shires of Engerland did. There’s no land shortage on either island, it’s all manufactured to enshrine paeon debt bondgage. Same old nonsense for centuries, but now it’s clear the wars that ravaged the island of Ireland were as dark as any septic tank grave crypt in Tuam. Like Tuam, many would rather carry on with delusions and singing “Fields Of Athreny” very, very badly. Still, it keeps the tourists coming… until the total Collapse unfurls with the next wave of Economic mayhem. As we’ve seen on this thread, there are some who will do anything other than look plainly and calmly into the mirror. Why bother, when there’s Blame The Brits as the ultimate cop-out. Cop on, before it’s too late….

Torture, Murder and Exclusion: Ireland’s first 10 years of Independence

Who is going to save Ireland? Not the bankers, it seems, so will it be the EU? Booming Britain? Or Booming USA?
I think that this is Pat Flannery’s fundamental point: It’s always about “who’s going to save Ireland?”. Major trading partners are always important, whoever they are, but perhaps there would be more clarity from “How are the Irish going to save Ireland?”. Or are we still thinking that any economic difficulties *must* be someone else’s fault, so someone else must fix it?

I think the lethargy or in-action is a legacy of structures put in place to control a colonised people.

The boffins in the various government departments are just so comfortable administrating the old British colonial structures that have remained in place even after independence.

I suppose to be fair there have been some changes which were imposed by our new masters in Europe like equal pay for women and so forth.The boffins were really dragged kicking and screaming to implement those changes…..

Root and branch change is what is really needed and I wouldn’t bother retaining the “services” of anything above middle management as all above that have a long history of abject failure…

Just in passing, it’s why I think that Scotland would do very well as an independent country, as they’d quickly get over the ‘England-this, England-that’ thing. They’ll partner as they need to, and that will be their strength – the ability to find the right people/countries and build relationships.
But first they have to get over 300 years of being treated like a tiresome illegitimate child. Difficult.

There are a few different Irelands. Public Sector Ireland is enjoying the full luxury treatment in their silklined Jobs/indexed pensions for life and many PS retirees are clients of the wealth management depts of accountancy firms who are advising them on how to invest their huge retirement lump sums…no I am not joking..ask any accountant involved in this sector. Some are eyeing up opportunities to re-enter the property market. Many in the private sector professional area are doing very well whilst some from that sector are unemployed.
People like Mr Williams himself are we assume also doing very nicely thank you.
Mr Haughey’s analogy about a rising tide lifting all boats ignored the fact that many of the smaller vulnerable boats were in fact crushed to pieces when the tide sharply dropped dumping the luxury cruisers and liners on top of them. Those crushed little boats will now only rise as flotsam to be tossed hither and thither by any rising tide.

SIPTU/MANDATE/CPSU are loud and vociferous, unless they are getting something for nothing.

The national debt is rocketting beyond control. We have pensioner age teachers living in villas in Spain, spending their money abroad and doing SFA for the Irish economy. We even have pensioner politicians who are doing the same in Florida, and other spots in the sun.

You will never have an honest debate in the public realm as long as RTE (or Pravda as it gets called increasingly) is prepared to intervene in the public debate in such a manner as to prevent certain subjects getting discussed honestly. Even the showcase honesty in RTE is marginal, and inconsequential, in the context of the “news coverage”.

They seem actively to be on an agenda to undermine Ireland’s interests, and then to raise the green jersey in the process of leading the public debate astray.

RTE can pick those whom they wish to destroy. And they also can pick those who can be allowed implement full throttle gombeenism, and seflish recklessness.

But mostly, they are a filter, to determine that whatever change may occur, that the same people are always in the money.

Our “exports” that make it in Britain are not exactly high margin exports. But they are exports that are very good at providing employment. Because the traditioanl export sector to Britain existed on the basis of previous competitive strengths, including labour cost.

At this point in time we have lost the labour cost competitiveness.

The entire sage, of Ireland’s public policy, nonsense from IBEC and ICTU, the obsessive pursuit of “inward investment” via low taxation rates for corporates, and the mad consumerism that the gombeen element in Irish politics (and the media) is trying to get drive upwards, is that Ireland is actually not accumulating capital. In fact the media in Ireland, seems to think that any remaining money should be reinvested in the Dartline area real estate market. This is completely nonsensical. Needless to say, there are no establishment politicians, or political pensioners calling this out for the disaster that it is.

If you are not accumulating capital, you are going to lose at capitalism. And not just financial capital. Also infrastructure capital. The transport system in the east of Ireland is a mess. The public services system in the whole country is inefficient (unless you are a SIPTU, or a CPSU politician). We have a state that gives bailouts to all and sundry…there is one for everybody in the audience.

To be honest, the Irish economics profession badly needs to rethink the entire market economy, and come up with better policies.

Beyond the mnc sector (which is now “too successful” in the sense that it is annoying the regulation making policy makers of our main trading partners) we are struggling in niche areas. We are not in the “mittlestand” business. We are in the business of allowing multinationals to use “brand Ireland” to boost their own sales, and we do nothing to exploit the opportunity ourselves. Classic example is the Alcohol sector. Ireland’s alcohol sector is as Irish as Britain’s car sector is now British. In other words, there is no capital accumulation process. Only a “sell out” process.

We achieved independence in a series of stages over the past century, and then we sold out any gains, in another series of stages, so as to indulge in some unaffordable lifetsyle accumulation. The idea of equality in Ireland since the 1960s, was no longer about bread and butter issues, but about the right to enjoy a particular lifestyle, that is in almost all senses, completely unsustainable.

Ireland is failing at capitalism. And Ireland is failing at socialism also. As revealed by the Tuam debacle, Ireland failed at Catholicism also. We even failed at imperialism, as evidenced by the debacle of out high flying construction conquistadors collapsing in debt.

Some serious, fundamental problems need to be addressed.

And here is the most shocking thing of all – the level of honest, and practicality that is required to address these issues is completely lacking in the public debate. In fact it has been smothered. And in the last twenty years it has been inreasingly destroyed. Superficiality has been on the rampage at an increasingly pervasive level. Whether it is the relentless push in favour of dangerous sports, to the soft spot for reckless financial behaviour in the gambling shop, to the reckless abuse to the health system via booze, Ireland has been on a treadmill to disaster. We create our own problems. In fact we even throw away our strengths. The Irish education system might have performed in the 70s, and 80s. But in the 50s and 60s it was wasting itself creating clergy. In the 90s and since it has been generating too many lawyers, too few doctors, too few technical graduates, and far too many arts graduates, and hotel managers.

That is the root of our predicament.

In the context of such wholescale incompetence, we should not become too lazy about our reliance on the British market remaining in existence forever.

We have fallen into the trap of there being an unwritten “right” to proceed with failing policies, and to deny the failure, in the face of appalling results.

To all of you that read this, please be honest about the context of your economic existence in Ireland.

[
A while back, the chief executive of the Irish Exporters Association (IEA), John Whelan, admitted “the exchange rate with sterling has been a barrier to Irish export growth in recent years”.
]

And therein lies an indication of Ireland’s “competetiveness” versus Britain. The Irish exporters lobby group says that everything depends on the exchange rate. They capital is not available to invest in the reduction of unit costs, or other technical innovations to retain market share.

The capital is squandered. Very little gets accumulated anyway, due to the Irish cost structure. Just look at the cost of operating a delivey lorry. Or electricity pricing. Or the local authority rates racket. Or the taxes that workers pay, or the official minimum wage levels that result in employers sticking new hires on Jobsbridge.

Ireland is in a productivity trap. And the leadership (sic) is committed to keeping it that way. The incentive mechanism is all messed up.

No wonder that the economic growth is focussed on one county, with perhaps some spillover into Kildare and Wicklow. The mnc growth in Cork Galway and North Dublin is barely sufficient in terms of the net wages, to provide a spillover to neighbouring areas to undermine a grinding recession.

Folks, Middle Ireland voted for a pot smoking independent TD, with a cartoon nickname, and an alliance with the hard left of Greece, to stick a finger in the eye of the Irish establishment. It is not merely about jobs. It is also about money, and trying to survive in an Ireland, whereby lots of things are ringfenced for the well connected, and the politically powerful. Free housing for some, who are reckless. Expensive housing for others. And persistent inefficiencies in the state system. The jollies are rolling out. Middle Ireland is dying. The three main political parties are failing at the polls because they are failing the people. We can expect more PR initiatives from the three of them. Labour will “discover their roots” (in a superficial sense). FF will talk about how they are “listening to the people’s concerns” when they really have nothing but contempt for the people. FG will talk about responsibility, when the results they present indicate that they not only misunderstand the concept, but completey undermine it.

Ireland has become an expensive, underperforming shell state, that exists for the EU to instruct debt colleciton for lobbyists weighing in on Brussels.

The greatest disappointment of all is that the mainstream politicians and medai, think that the problems need some PR statement, loads of “epathy”, and massaging. An no solution. Forget about that.

What annoys me most is the pre-printed price tags on items in supermarkets with a euro lookalike pound sign. I keep falling for this stupid trick. Ireland must be the only country that can do these tricks in supermarkets.

With all respect, you’re a supermarket’s dream customer. If your mind is so oriented, it’s fun to play against their game of ‘fool the customer’. A few of their tricks:
- Have price changes that are so huge that you assume you’re memory is wrong.
- Charge more per unit in the ‘pack of four’ offers than the individual items.
- Fruit and vegetables pricing
- Package weight changes – these can push prices by 15%-20% with no price change, or even a ’5% reduction’
- Multiple and rapid brand changes – these enable multiples of the above.

I know it us all about confusing the customer but I think this is pushing the limit. Having a big yellow sticker on the item in a foreign currency and the euro price in small print should be illegal. It should put the country’s currency on the price. I bet you that if this happens in Germany the Germans won’t accept it. Does this happen in any other country or is it only in Ireland?

People, probably by far the majority, who accepted and believed that markets were free and without officially condoned intervention and manipulation have suddenly acquired new headwear with the publication by the Financial Times thatcentral banks own almost 50% of the stock traded on global stock markets! In terms of the numbers involved, we should perhaps now refer to the “Tinfoil Helmet Army Group” – it is no longer a mere Brigade who live the life of make believe!
Regards
daan
Posted in lemetropoleCafe. The stock markets are so manipulated they bare little relationship to reality.

Nothing bares any relationship to reality. All is smoke and mirrors, white is black and black is white. the ambiance of 1984 is hard upon us all.
People will be devastated when the smoke and mirrors clear and reality hits home.

I think having read Deco recent very readable contributions it should be fitting that our host should write a new book with the significant contributors to this site over the years .It would be a fascinating book .I have no doubt it would be a best seller and record in history .

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